A Debt Management Plan is an informal arrangement between you and your unsecured creditors, whereby your payments are re-negotiated to an affordable level. Once agreements are reached, you pay a single regular affordable amount each month that is divided amongst your creditors on a pro rata basis.
How much will I pay each month?
This depends on your current financial position. An agreement will be reached with your creditors which will mean that you can make one affordable payment each month.
How will my ‘disposable’ income be calculated?
Your disposable income is the amount of income you receive each month, less any secured creditor payments (e.g. mortgage or secured loan) and less your priority living costs (food, utilities, clothing, council tax etc)
How long will I have to make payments for?
The duration of your plan will be until you have either repaid your debts or your circumstances have sufficiently changed that you are eligible for an alternative solution.
How do I know that my debts are being repaid?
You will be provided with an initial statement detailing the payments to all your creditors. Thereafter, you will be provided with regular statements which will detail all your payments and distributions made to your creditors on your behalf.
Is a debt management plan another loan?
Debt Management is not a loan, but a means by which you can consolidate all your outstanding unsecured debts into one affordable monthly payment without any further borrowing.
What if I fail to keep up my monthly repayments?
Because your debt management plan is an informal arrangement between you and your creditors you are able to cancel it at anytime. Clearly this will be a signal to your creditors and you will see an increase in their collection actions, such as letters and phone calls.
Will the debt management plan be able to include all of my creditors?
A Debt Management Plan will include all of your unsecured creditors. However there are some which may not be able to be incorporated into a Debt Management Plan such as creditors with security, i.e. debts if not paid will result in significant penalties such as having your home or car repossessed. You must maintain payments on your priority bills, such as gas, electric, water, council tax etc.
Will my credit rating be damaged?
By the time they approach us, most people have defaulted on their credit commitments under the consumer credit act as they cannot afford the repayments, and therefore their credit rating has already been affected. Whatever solutions is then used to solve the problem will not repair their credit rating, this will only happen once creditors have been repaid and a new history of payments shown.
Will the plan prevent my creditors taking further recovery action?
We cannot guarantee that your creditors will not take further action, including court action to recover debts from you, but if they do, we will help you respond to that and check that the repayment that is required, is within your ability to repay
Will my creditors definitely accept this plan?
By law, your creditors have to accept the payments that are made on your behalf. However, we cannot guarantee that your creditors will accept your Debt Management Plan favourably, which will determine how successful we are in freezing interest and charges
Will I have to pay my debts off over a longer period of time?
You will have to pay them back over a longer period. However, you will be paying an affordable monthly payment which will give you peace of mind.
Will I be able to get a Debt Management Plan if I have CCJ’s
If you have an existing CCJ (County Court Judgement) you will be applicable for a Debt Management Plan.
Does it matter if I am a homeowner or tenant, unemployed or working part time?
Debt management Plans are suitable for both Home owners and tenants.
What if my circumstances change?
Your plan will be reviewed on a regular basis, but if your financial circumstances change get in touch with us immediately. We can review your current arrangements and will work with you to discuss options and give you alternatives.
Will a Debt Management Plan pay off my debts?
A debt management plan consolidates all of your outstanding unsecured debts allowing you to make affordable monthly repayments to clear this debt. A plan of action will be agreed with you from the start to clear your debts.
Do I have to tell anyone?
Any personal information regarding your Debt Management Plan will not be disclosed, unless you request that it is. If you do not wish anyone to know that you have a Debt Management Plan in place you do not need to inform them.